Before enabled new ways of lending mortgages, the

Before the deregulation of the financial markets (Big Bang) banking was more simple and domestic. The high street banks only dealt with savings,  giving away loans and overdrafts. Building societies were for giving away mortgages and the investment banks leaded investors into making profitable investment decisions. After the Big Bang, banking became more complex and global, the high street banks started playing the role of the investment banks therefore the distinction between those banks disappeared.  Banks increased their assets by giving away more mortgages and this lead to a price rise in the housing industry. As this process continued the banks started getting greedy and gave away more and more mortgages to people who did not even have the ability to repay it (sub-prime lending). Essentially the party which assessed the risks of lending became the Credit Rating Agencies which were hired by the banks,  so they gave inaccurate triple-A ratings to those  mortgages. This lead to an increase in the interest rates which led to a decrease in the amount of people borrowing from the banks which then led to the collapse of some of those banks as they couldn’t repay their customers. The Big Bang enabled new ways of lending mortgages, the increase in the house prices in the early 2000’s encouraged  bankers to become more risk seeking. This led to Sub-Prime Mortgages. Some of these mortgages could be secured ( asset backed securities). The easier access  to mortgages increased the demand and prices in the housing market.  Securitization, along with credit default swaps (CDS) led to independency within the financial system. Defaults in the sub-prime rose along with inflation.  Liabilities of banks to the debt increased along with their liabilities to CDS claims. In conclusion, the deregulation of the financial markets did lead to an increase the risk of a financial crisis in 2008.